Grossman LLP | ​<strong >Old Master Forgery Story Update: </strong ><strong >New Developments In Two Sotheby’s Lawsuits to Recover </strong ><strong >Proceeds From Sales of Alleged Fakes</strong >
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  • Old Master Forgery Story Update: New Developments In Two Sotheby’s Lawsuits to Recover Proceeds From Sales of Alleged Fakes
    04/12/2019
    We have written on several occasions (see here, here, and here) about the tangle of disputes that have arisen from the discovery of multiple suspected forgeries of Old Master artworks.  Now, one such dispute has reached a settlement, and another has resulted in a judgment for Sotheby’s; but other questions about these works, and the Old Master market generally, remain.
     
    The story begins in 2011, when Sotheby’s brokered a private $10 million sale of a painting purportedly by Dutch portrait painter Frans Hals; it had come to Sotheby’s through a chain of ownership that can be traced back to a French collector named Ruffini.  The work had been vetted by France’s Center for Research and Restoration, which believed it was an authentic previously-unknown Hals; at one point prior to the 2011 Sotheby’s sale, the French government had even tried (unsuccessfully) to raise the money to purchase it for the Louvre.
     
    But in 2016, a different painting, from the collection of the Prince of Lichtenstein—purportedly by German Renaissance painter Lucas Cranach the Elder—was seized by French authorities who suspected it was a forgery.  This “Cranach” had also come onto the market with a provenance that could be traced back to Ruffini.  Based on the red flags about the Cranach, and the fact that the Hals and the Cranach had come from the same source, Sotheby’s arranged for the Hals to be sent to a specialized lab for scientific testing.  (The lab, Orion Analytical, run by forensic expert Jamie Martin, also played a key role in analyzing and confirming the forgeries involved in the Knoedler scandal.  It has since been acquired outright by Sotheby’s.)   Orion’s testing indicated that the “Hals” contained modern materials and is a fake.
     
    Based on these tests, Sotheby’s rescinded the Hals sale and refunded the purchaser (American collector Richard Hedreen).  Sotheby’s then took legal action in the U.K. courts, suing the seller of the “Hals”—London art dealer Marc Weiss—to recover the $10.75 million that Weiss and his client (David Kowitz, a hedge fund founder and art collector, who was acting through an entity called Fairlight Ventures)—received in the 2011 private sale of the “Hals.”  Both Weiss and Fairlight have steadfastly maintained their position that the Hals is genuine, notwithstanding the forensic evidence. 
     
    Just days before the trial was to begin in London, Weiss and Sotheby’s reached a confidential settlement.  Thus, Sotheby’s case went forward only against Fairlight, with the court reportedly focusing on the contractual provisions governing the sales deals.  The trial also included testimony about the Hals from experts, including Jamie Martin.  The proceedings have now concluded, but the court has apparently reserved its decision until later this year.
     
    Notably, a related lawsuit over another Ruffini-linked artwork recently concluded with a victory for Sotheby’s.  In January 2017, Sotheby’s sued in New York federal court (Docket No. 17-cv-00326) over a work titled Saint Jerome, which had at one time been attributed to the 16th century Italian painter known as Parmigianino.  The defendant in the case, Lionel de Saint Donat-Pourrieres, is a collector from Luxembourg who, according to the complaint, consigned the piece to Sotheby’s in 2011.  The work was then included in a Sotheby’s auction in January 2012, where it sold for $842,500, of which the consignor received $672,000.  But as with the fake “Hals,” Saint Jerome was examined by Orion and determined to be a forgery.  So as with the Hals, Sotheby’s rescinded its sale of the work; refunded the money paid by the buyer in its auction; and looked back to the consignor, Mr. Saint Donat-Pourrieres, to recover the money he received in that same sale.  The suit asserted a breach-of-contract claim, based on Sotheby’s standard consignment agreement, which specifically allows Sotheby’s to rescind a sale if Sotheby’s learns the work is “inaccurately described in the catalogue,” a “counterfeit,” or if Sotheby’s determines, in its sole judgment, that the sale might subject Sotheby’s to liability.  (Note that this theory did not require Sotheby’s to prove that the consignor knew the work was a fake.)  As it turned out, Mr. Saint Donat-Pourrieres defaulted in the litigation, and in November 2018, a judgment was entered for Sotheby’s, entitling the auction house to over $1.2 million (which includes the amount it refunded to the buyer, plus interest, plus the costs and expenses of Orion's forensic inspection of the painting as well as attorneys’ fees).
     
    These cases reveal continued uncertainty in the Old Master market, given the ongoing questions about these and other works, especially those that include Ruffini in their provenance.  (For his part, Ruffini has said he never presented any particular painting as authentic, and has not been actually charged with any wrongdoing.)  In many cases, the works involved in this scandal were vetted by multiple experts who reached differing conclusions about their authenticity.
     
    These cases also provide a reminder that dealing with a major auction house does not equal total insulation from authenticity problems; even the biggest players in the market can “miss” a fake.  And when that happens, buyers may later learn that they didn’t receive what they thought they were buying—and even innocent sellers or consignors of the work may find themselves on the hook for paying back the auction house and the buyer for their trouble.